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COVID-19

Airlines may need to retool routes with decline in business travel

Meghan McCarty Carino Aug 26, 2020
Heard on: Marketplace Morning Report
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Business travelers have outsize influence on airlines, generating around half of the industry's revenues, according to analysts. Daniel Slim/AFP via Getty Images
COVID-19

Airlines may need to retool routes with decline in business travel

Meghan McCarty Carino Aug 26, 2020
Business travelers have outsize influence on airlines, generating around half of the industry's revenues, according to analysts. Daniel Slim/AFP via Getty Images
HTML EMBED:
COPY

U.S. airlines are warning of major job cuts if federal aid isn’t re-upped past its October end date. American Airlines said it would cut 19,000 jobs by October. Delta Airlines may furlough around 2,000 pilots, with another 1,800 taking early retirement.

Air travel is still down about 69% from last year, and while a vaccine or effective treatment for the virus could turn things around for tourism, business travel may never be the same.

Before COVID-19, Samuel Chu enjoyed his weekly business trips from Los Angeles to Washington, D.C., for his work as an advocate for several human rights nonprofits. Now he misses it so much he’s been switching his pillow occasionally to simulate sleeping in a different bed.

“So much of my mental biological clock is sort of wired that way,” Chu said.

Business travelers have outsize influence on airlines. They often buy more expensive and profitable tickets, generating more than half of the industry’s revenues, according to airline analyst Henry Harteveldt, president of Atmosphere Research Group.

“Business travel is almost as important to airlines as jet fuel,” Harteveldt said.

But many companies have now adapted to doing more virtually, said airline consultant Jay Sorensen.

“That is a reflex that has been trained and will not go back to what it once was,” Sorensen said.

He said that may mean that common business travel routes, like New York to D.C. or LA to San Francisco, could be cut back, and some flights might become more expensive.

COVID-19 Economy FAQs

What are the details of President Joe Biden’s coronavirus relief plan?

The $1.9 trillion plan would aim to speed up the vaccine rollout and provide financial help to individuals, states and local governments and businesses. Called the “American Rescue Plan,” the legislative proposal would meet Biden’s goal of administering 100 million vaccines by the 100th day of his administration, while advancing his objective of reopening most schools by the spring. It would also include $1,400 checks for most Americans. Get the rest of the specifics here.

What kind of help can small businesses get right now?

A new round of Paycheck Protection Program loans recently became available for pandemic-ravaged businesses. These loans don’t have to be paid back if rules are met. Right now, loans are open for first-time applicants. And the application has to go through community banking organizations — no big banks, for now, at least. This rollout is designed to help business owners who couldn’t get a PPP loan before.

What does the hiring situation in the U.S. look like as we enter the new year?

New data on job openings and postings provide a glimpse of what to expect in the job market in the coming weeks and months. This time of year typically sees a spike in hiring and job-search activity, says Jill Chapman with Insperity, a recruiting services firm. But that kind of optimistic planning for the future isn’t really the vibe these days. Job postings have been lagging on the job search site Indeed. Listings were down about 11% in December compared to a year earlier.

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